Survive the Bear Market: Lend BTC
Although I am a fan of holding Bitcoin, a particular game plan has reliably paid off in the long term, I’m well aware that many people are hurting in this bear market.
Those who are very desperate to see any kind of gains during this down trend may be open to learning about how to lend out Bitcoin in return for interest payments.
There are a couple different ways you can lend your Bitcoin you hold and receive passive income in the form of interest paid by the receiving party.
VIEW VIDEO HERE
We’ve got platforms that bring together small/medium businesses who need loans and lenders. Platforms like these include:
- Bitbond
- BTCPop
You can investigate who you are loaning to and choose how much and for how long you will provide the loan.
Here are some things to consider if you want to take part in these types of lending platforms:
- Pay attention as a lender if you have the ability to choose the base currency. so if you lend in USD and Bitcoin goes up, you'll receive less BTC but the USD amount will be the same
- Borrowers will need to disclose their personal information and will often need to verify it with social media accounts and or live video chats.
- Interest rates are decided based on the riskiness of the loan, if you want to earn more money through higher interest rates you’ll have to come to terms with the fact that the loan associated with it is very risky and very well may never be repaid.
- If your loan is unpaid by the borrower you can be provided information suitable for pursuing legal action. Or you can sell it to a debt collection agency. Neither of which are guaranteed to getting your money back.
There is another way you can also lend your bitcoin to traders and that is by using exchanges like Bitfinex and Poloniex.
Here, you can lend your bitcoin or other cryptocurrencies like Ethereum to traders who will use your coins to perform the stress inducing act of margin trading.
Margin trading is when traders borrow funds to make trades. When they do it right, they make exponentially more money than they would have been able to with their own funds, but if the trade goes south, the traders will find themselves owing exponentially more money than they are capable of repaying.
In the case of lending bitcoin on an exchange, the interest rates are determined by the market, those wanting to borrow will choose the least expensive interest rates.
Also, you are relying on the exchange to margin call these traders if their trades have become far too risky and have reached the threshold set in place by the exchange. It’s been said that you can expect to be paid anywhere from 3%-10% interest annually by lending on Poloniex, but this I’m sure is subject to change and is in no way a guarantee that you’ll have that same kind of payout.
Keep in mind that if you use either of these lending options you are placing your trust in the borrowers and in the platforms to pay back your loan. Not to mention the fact that you will be unable to trade the coins you’ve lent out. So if the markets start swinging heavily in the red or the green again, you’ll have to be patient to regain access to your bitcoin before you can do anything with it yourself.
If despite these warnings you’re willing to lend out your coins in order to earn some interest, I’ve included links to a lot of helpful information down below.
Reviews of Lending Sites
Both lending sites and exchanges
Information on Bitbond
Lending BTC for Margin Traders
Basic tutorial on how to lend BTC on Poloniex
I use to do this w poloniex and enjoyed the idea of making btc while holding it.
Interesting options. But like you wrote, it is pretty risky. I rather hold.
I know there are way better times just ahead of us
I've lost some 80 bitcoins on lending. Beware.
Wow I'm sorry to hear this. Do you mind sharing more about your experience so others can learn as well?
I've written a couple of posts on my experiences ... though, here is some of the reasons:
Also, I'm horrible at collecting debt - going around with a baseball bat and visiting people, that's not really my favorite hobby.
Thanks for giving a detailed list on why it can be dangerous to lend cryptocurrency.
Yes, indeed. I used Bitbond and I'd say 80% of the loans I participated in defaulted. Their collection efforts produced absolutely zero funds. I hope they're enjoying my money.
It is very interesting what you show us here, it is an alternative that I had not studied, and that I have not heard from anyone else either. But what about the moral hazard?
Maybe I'll take a look, but more with the intention of receiving a loan, mainly because I do not have much. lol
Definitely do your research from a skeptical perspective. Nothing is a magical fix and there will almost always be hard lessons to learn. Make sure you take the time to educate yourself before making any decisions.
what great content. Such knowledge. wow
Now the whales have to long their bitcoin because their shortening strength is near to end. The maximum that btc can go down is upto 3,00$ not below that. Before the launch of the bakkt we can see btc upto 12,000$ also
Interesting! Good post.
I want give also soon some loans... but I mast wait for the next year and see what the prices will do.
And the coolest is that I get to be my own bank. It's crazy to think that there's a very small few people out there who can only give loans and no one else has this permission.
But my bones inside me they some how say that this old banking is dying, and it's gets tragic end.
Very true on the risk of loan out cryptocurrency. Probably too soon in the game for this to be a regular thing in the crypto space. Then again it's all about how much risk one wants to take. Good Information and thanks for sharing. Sincerely JR
Bad time to invest, This is not a bear market. This is a question of credibility and sorting out where crypto goes. I have written a steem it article about this. Reality is lot of startups is investing block chain technology adoption but without the "value" game of crypto. This is the core reason. Hopefully a very successful product arises either in consumer space or business space that supports the "value" trading (steem like or storj like) , then we have a shot at this, otherwise crypto coins are going to "0"